The humanitarian response to the plight of Ukrainian refugees has been ray of light this week, but with diplomacy failing and military means ruled out, the West’s support to the Kiev Government in its war with Russia remains restricted to Intelligence and Economic levers of power.
Unfortunately, Putin foresaw this and has built huge financial reserves and hoarded key electronics and pharmaceutical goods before launching his invasion. The Russian State is stepping in to keep people at work and the banking system has not collapsed as Washington thought it would. With oil still around $100 per barrel, Russia will earn about four times more than it did last year from exports. It is likely that China will fill the gaps in consumable goods such as cars, that the western governments have sanctioned.
Meanwhile, the Western economies are facing their own problems with post-Covid inflation exacerbated by the lack of badly needed Eastern commodities. For example, the Russian and Ukrainian combined wheat production accounts for 30 per cent of the global demand. Miners are also in a stranglehold with refining costs of copper and platinum group metals increasing dramatically because they require hugely energy-intensive processes.
This all reminds me of the situation in 1920 when Parliament was supporting the White cause in Ukraine and Poland against the Bolsheviks in Moscow. At a Cabinet meeting on 17 November, Lloyd George’s government spent an hour and a half discussing sanctions on Russia. The President of the Board of Trade, Sir Robert Horn made an impassioned plea based on the critical economic situation in Britain, with business confidence very low and unemployment very high and was supported by the Prime Minister, who said: “When I mentioned the possibility of our going to war to support Poland, a shudder passed through the House and those who were clamouring against Bolshevism immediately shewed the white feather… I have heard predictions about the fall of Soviet Government for the last two years, Denikin, Judenitch, Wrangel have all collapsed, but I cannot see any immediate prospect of the collapse of the Soviet Government.”
Unfortunately, Putin’s government seems to be not too different; see Part 2 of Churchill’s Abandoned Prisoners for a grounding in the modern Anglo-Russian relationship.